Moola Market Commentary - November 2017

Posted by Simon Moore on November 27
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Global Economic Overview

2017 seems on track to be a good year for the global economy overall. Global growth is approaching 4% on the International Monetary Fund's estimates, which would be a relatively good result compared to recent history.


China continues to be a strong contributor to global growth. The Chinese economy appears on course to double in size in just ten years from 2010 by 2020. Unfortunately, this year, the UK's growth appears to be falling slightly short of expectations, with the first half of 2017 showing slower economic growth than many expected, and growth estimates in future years being revised down. However, though UK growth may be soft, it remains in positive territory.

It's also important to remember that although many of the headlines you see probably concern the British economy, Moola portfolios are internationally diversified and so can benefit from the positive trend of global growth without necessarily being over-exposed to any individual country, including the UK.

Commodities

The oil price has strengthened in recent months, in part due to rising tensions in the Middle East, which supplies much of the world's oil. Though the price of many commodities, including oil, have rebounded from the fairly extreme lows of early 2015, in most cases they are still well below the highs seen in recent decades.

German Elections

New elections in Germany appear probable with the collapse of the coalition government, though discussions are ongoing and a minority government is possible. Generally, financial markets tend to react more to economic than political news, but the election may mark a change of direction for Germany, which has been among the stronger performing European economies in recent years.

UK Budget Interest Rates

The recent UK budget offered help for new home buyers by reducing or eliminating stamp duty on certain new homes, and offered support for new housing construction. Longer term growth estimates for the UK economy were revised down.

The Bank of England recently raised interest rates in response to increasing inflation in the UK. However, interest rates remain low relative to longer term history. The move was symbolic, as the first rate increase by the Bank of England in a decade.

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Written by Simon Moore

He was previously CIO of FutureAdvisor, a US digital advisor. His most recent book Digital Wealth, explains automated investing. He studied economics at Oxford, and completed his MBA at the Kellogg School of Management.

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